Chinese cities face four tests of sustainable modernization

Infrastructure investment, land rights, migration and financing pose challenges to the CCP

By William Antholis

Illustration: Lance liu

Among the most significant developments driving China’s economic growth and rising living standards is the shift from a rural, agricultural society to a modern, urban one. With almost 700 million Chinese — more than half of the population — already living in cities, the centrality of urbanization to China’s future is indisputable. Yet exactly how the trend will develop remains far from certain.

At the the third plenary session of the 18th Central Committee of the Chinese Communist Party (CCP) in November last year, China’s top leadership laid out one path forward. The meeting’s communique and the subsequent road map for reform offer a glimpse into how China’s leaders anticipate the country’s urban development, including the role that public policy will play in guiding the trend.

So far, China has largely taken a “Field of Dreams” approach to urbanization: “Build it, and they will come.” Indeed, over the past 30 years, massive public investment and economic liberalization spurred rapid urban growth in coastal provinces. Now, China’s leaders are increasingly taking that strategy inland, making critical investments in physical and human capital.

The effectiveness of these investments will depend on the sequence and rate of their implementation and on how skillfully they are adapted to each locality’s distinct resources, needs, and aspirations. Four interrelated issues must be addressed.

For starters, Chinese infrastructure investment has led to enormous gains in construction-related industries and employment, while boosting local GDP considerably. Given that local officials’ career prospects depend on maintaining high growth rates, the emphasis on infrastructure development is likely to continue, despite sustainability concerns stemming from the massive consumption of water, energy and land that such investment entails.

Yet Beijing cannot afford to ignore the country’s deepening environmental crisis. Especially in China’s massive interior, rapid urbanization requires high output from steel mills, chemical refineries and coal-fired electricity plants, leading to the dangerously high levels of air pollution that have become synonymous with Chinese-style development.

Ever-worsening air quality has forced China’s government to begin focusing on cleaning up local particulate pollution and building a low-carbon economy. To this end, China’s National Development and Reform Commission has issued its first-ever blueprint for adapting to climate change.

Moreover, since January, the authorities have required 15,000 factories, including state-owned enterprises, to disclose official data on airborne emissions and water discharge. The Chinese government has pledged to spend US$280 billion on measures to reduce air pollution over the next five years. To boost these policies’ effectiveness, sustainability metrics should be factored into local leaders’ performance evaluations. This is easier said than done in a country where, for more than 30 years, living standards have been seen in more narrowly economic terms.

The second major issue facing China during the urbanization process is the conflict between rural landowners and local governments — a highly combustible dynamic. Forced demolitions have already sparked thousands of isolated protests. If this is allowed to continue, public outrage will intensify, generating social instability and undermining economic aspirations.